Administrative Review Board Decisions
The following case summaries were created by the Administrative Review Board staff.
Turin v. Maiden Holdings, LTD, ARB No. 2021-0066, ALJ No. 2010-SOX-00018 (ARB June 29, 2023) (Decision and Order)
PROTECTED ACTIVITY; REASONABLE BELIEF; FAILURE TO PROVE ESSENTIAL ELEMENT OF RETALIATION CLAIM
In Turin v. Maiden Holdings, LTD, ARB No. 2021-0066, ALJ No. 2010-SOX-00018 (ARB June 29, 2023), the ARB summarily affirmed the ALJ's Decision and Order denying a complaint filed under the whistleblower protection provisions of Section 806 of the Sarbanes-Oxley Act (SOX). Respondent hired Complainant to be its General Counsel in July 2007 and terminated his employment in December 2008. Complainant filed a complaint alleging that Respondent (and its co-respondents) discharged him for engaging in whistleblowing activities protected by SOX.
PROTECTED ACTIVITY; COMPLAINTS ABOUT CORPORATE ACQUISITION DID NOT CONSTITUE SOX-PROTECTED ACTIVITY
The ARB affirmed the ALJ's conclusion that Complainant failed to carry his burden on the threshold requirement of proving that he engaged in activity protected by SOX. To prevail on a SOX claim, a complainant must prove, by a preponderance of evidence, that: (1) he engaged in activity protected by the statute; (2) he suffered an adverse employment action; and (3) the protected activity was a contributing factor in the adverse action.
Complainant presented several arguments in support of his assertion that he engaged in SOX-protected activity prior to the decision to terminate his employment, including claims that he complained to several individuals about Respondent's method of financing an acquisition. SOX prohibits covered employers from retaliating or otherwise discriminating against an employee who provides information or otherwise assists in an investigation regarding conduct "which the employee reasonably believes constitutes a violation of section 1341 [mail fraud], 1343 [wire fraud], 1344 [bank fraud], or 1348 [securities and commodities fraud], any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders . . . ."
The ARB affirmed the ALJ's conclusion that Complainant made statements during his employment that were critical of Respondent's actions, but none constituted protected activity under SOX.
PROTECTED ACTIVITY; REASONABLE BELIEF; COMPLAINANT MUST PROVIDE INFORMATION THAT HE REASONABLY BELIEVES CONSTITUTES A VIOLATION OF LAW
The ARB held that substantial evidence supported the ALJ's finding that a reasonable corporate lawyer, with experience comparable to Complainant's, would have recognized that Respondent's acquisition took place during the financial crisis of 2008, which complicated the acquisition. The ALJ correctly found that Complainant did not have a subjective, good-faith belief that the conduct he complained of constituted violations of any of the specifically enumerated provisions set forth in SOX. Additionally, substantial evidence supported the ALJ's finding that Complainant did not have an objectively reasonable belief of any violations.
FAILURE TO PROVE AN ESSENTIAL ELEMENT OF A RETALIATION CLAIM RESULTS IN FAILURE OF ENTIRE CLAIM
The ARB held that, because Complainant failed to prove he engaged in protected activity under SOX, and because protected activity was a requisite element of his case, his entire claim failed, and it did not need to address any of the ALJ's other findings of fact or conclusions of law on other issues. Specifically, the ARB did not need to determine whether: (1) Respondent was aware of Complainant's alleged protected activity; (2) any alleged protected activity caused Complainant to suffer an adverse employment action; (3) the alleged protected activity was a contributing factor in any adverse actions; or (4) the ALJ's erred in dismissing other respondents.
Smith v. Franciscan Physician Network, ARB No. 2022-0065, ALJ No. 2020-ACA-00004 (ARB June 29, 2023) (Decision and Order)
MOTION TO STRIKE; PROTECTED ACTIVITY UNDER THE ACA; COMPLAINANT'S REASONABLE BELIEF
In Smith v. Franciscan Physician Network, ARB No. 2022-0065, ALJ No. 2020-ACA-00004 (ARB June 29, 2023), the ARB affirmed the ALJ's Order Granting Summary Decision. Complainant worked as a physician for Respondent. Respondent provides coordinated, comprehensive healthcare across hospitals, physician practices, and other healthcare providers to enhance the healthcare experience of patients. Throughout Complainant's tenure with Respondent, she reported multiple alleged violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Complainant reported these alleged violations to Respondent's medical director, Respondent's compliance hotline, and others.
On April 22, 2020, Complainant filed a complaint with OSHA alleging that Respondents violated Title I of the ACA by unlawfully terminating her employment in retaliation for her engaging in protected activity. OSHA dismissed the complaint and Complainant requested a hearing with OALJ. Before the ALJ, Respondent filed a Motion for Summary Decision on the grounds that Complainant was unable to "establish a genuine issue of material fact sufficient on her claim to warrant a hearing on this matter." Specifically, Respondent argued that it was undisputed that Complainant did not engage in protected activity under the ACA.
On September 6, 2022, the ALJ issued an Order Granting Summary Decision dismissing Complainant's claim after concluding that Complainant had not: (1)identified any provision of Title I that regulates a health care provider; (2) explained how Complainant's alleged protected activities violated any of the health insurance reforms found in Title I; or (2) provided sufficient evidence that Complainant believed that her complaints pertained to the ACA's reforms relating to health insurers or group plans.
On September 21, 2022, Complainant petitioned the ARB for review of the ALJ's Order Granting Summary Decision. On February 10, 2023, Complainant timely filed an Opening Brief (Initial Opening Brief) and Exhibit Emails and Statement of Fact Forms (Exhibits). The following day, Complainant filed an untimely Final Edited Opening Brief (Revised Opening Brief). In these submissions, Complainant listed numerous instances of Respondent's alleged HIPAA violations. On March 7, 2023, as an alternative to filing a response to Complainant's filings, Respondent filed a Motion to Strike Complainant's Initial Opening Brief, Exhibits, and Revised Opening Brief (Motion to Strike), arguing that: (1) Complainant's Exhibits should be stricken as untimely; and (2) Complainant's filings should be stricken because they contained evidence and related arguments newly presented on appeal. In the alternative, Respondent requested that portions of the filings containing protected health information (PHI) be stricken. Complainant filed a Response to Motion to Strike on March 21, 2023, claiming that "[t]here is [not] any new information that wasn't already submitted either the written or verbal form to" Respondent's human resources department or attorneys.
NEW EVIDENCE ON APPEAL; ARB STRUCK NEW INFORMATION AND EVIDENCE FILED FOR FIRST TIME ON APPEAL
The ARB granted, in part, Respondent's Motion to Strike. The ARB reviewed Complainant's filings and found that they were largely comprised of claims of protected activity and adverse actions raised for the first time on appeal and Exhibits comprised of evidence not previously part of the record before the ALJ.
When determining whether to consider new evidence, the ARB relies on the standard contained in the Rules of Practice and Procedure for Administrative Hearings Before the Office of Administrative Law Judges, which provides that "[n]o additional evidence may be admitted unless the offering party shows that new and material evidence has become available that could not have been discovered with reasonable diligence before the record closed.
The ARB determined that Complainant failed to demonstrate that the new materials she wished to introduce into the record on appeal could not have been discovered with reasonable diligence or were not readily available prior to the closing of the record below. To the contrary, Complainant admitted that these new materials were either in her or Respondent's possession, or were readily available prior to the closing of the record below. Thus, the ARB struck Complainant's Exhibits in their entirety. Moreover, the ARB affirmatively disregarded Complainant's new claims of protected activity and new allegations of adverse actions in her briefs before the Board.
PROTECTED ACTIVITY; COMPLAINANT'S ALLEGED PROTECTED ACTIVITY CONSISTED SOLELY OF REPORTING ALLEGED HIPAA VIOLATIONS AND SUCH REPORTS WERE "CLEARLY OUTSIDE THE REALM OF TITLE I"
An employee is protected under the ACA if she provides information or complains to her employer about, or refuses to participate in, conduct that she reasonably believes violates any provision of Title I of the ACA. In affirming the ALJ, the ARB determined that Complainant's alleged protected activity consisted solely of reporting alleged HIPAA violations and such reports were "clearly outside the realm" of Title I of the ACA.
Complainant made complaints alleging that Respondent violated HIPAA on several occasions. These alleged violations included a nurse practitioner accessing a patient's medical record even though she had not participated in the patient's care; a physician's assistant accessing charts for patients to whom that physician's assistant was not assigned; and staff improperly accessing a medical assistant's medical records who had been in the emergency room to obtain care.
Before the ALJ, Complainant summarily asserted that her HIPAA complaints are protected under Title I. Complainant's sole discernable attempt to connect the ACA and HIPAA was a statement that HIPAA was promulgated prior to the passage of the ACA. Complainant did not identify which provision of Title I she believed Respondent violated or explain how her specific type of HIPAA concerns related to Title I. Nor did Complainant assert that she reasonably believed any of the alleged HIPAA violations also violated any provision of Title I. Similarly, before the ARB, Complainant's briefs were replete with assertions regarding her complaints of HIPAA violations but did not reference Title I or allege that she had a reasonable belief that the HIPAA violations violated any provision of Title I.
The ARB recognized that Complainant's HIPAA complaints related to HIPAA's Privacy Rule and Security Rule. These rules establish national standards to protect individuals' medical records, PHI, and electronic PHI, respectively. The ARB examined Title I and determined that Sections 1104, 1201, and 1413 are the only ACA provisions which potentially relate to or reference HIPAA patient privacy concerns.
The ARB analyzed each section. As to Sections 1104 and 1201, the ARB determined that while they piggybacked from existing HIPAA reforms, these sections clearly do not relate to patient privacy or medical record safeguarding within medical care settings. Instead, the goal of Section 1104 is to make the health care system more uniform and efficient by reducing clerical burdens on providers, patients, and health plans, while the goal of Section 1201 is to prevent discrimination against individuals based on health factors. As to Section 1413, the ARB determined that while it focuses on privacy concerns for individuals, such privacy and data concerns are limited to the establishment of state health subsidy programs, not patient privacy and data concerns within medical care settings.
Thus, the ARB concluded that Complainant's HIPAA concerns related exclusively to patient privacy and medical record safeguarding and were clearly outside the realm of Title I's health insurance and healthcare coverage reforms and/or any of the HIPAA provisions contained in Title I.
PROTECTED ACTIVITY; REASONABLE BELIEF; COMPLAINANT DID NOT SUFFICIENTLY ALLEGE THAT SHE HAD A REASONABLE BELIEF THAT THE CONDUCT SHE COMPLAINED ABOUT RELATED TO ANY PROVISIONS FOUND IN TITLE I
The ARB also concluded that Complainant did not sufficiently allege that she had a reasonable belief that the conduct she complained about related to any provisions found in Title I. Before the ALJ, Complainant argued that she "reasonably believe[d] that Respondent violated the HIPAA Privacy Rule which provides data privacy and security provisions for safeguarding of medical information and was promulgated prior to the passage of the ACA." Before the ARB, Complainant reiterated her HIPAA patient privacy complaints. Upon examining Complainant's submissions before the ALJ and ARB, the ARB determined that Complainant did not address the reasonableness of her belief that Respondent's alleged HIPAA violations also violated Title I.
The ARB noted that it has similarly affirmed summary decisions where complainants fail to present sufficient evidence regarding their objectively reasonable beliefs under SOX and cited to Micallef v. Harrah's Rincon Casino & Resort and Fredrickson v. The Home Depot U.S.A., Inc. The ARB reiterated that other than Complainant's general assertions that reporting HIPAA violations are protected conduct and that the HIPAA Privacy Rule apply to health plans, she presented no other arguments or evidence to support her subjective good faith belief or why it was reasonable. The ARB relied upon its precedent and held that general assertions are insufficient to avoid summary decision. Thus, Complainant did not sufficiently allege that she had a reasonable belief that the conduct she complained about related to any provisions found in Title I.
Baltimore Waterproofing, Inc. v. Administrator, Wage and Hour Div., USDOL, ARB No. 2022-0053 (ARB June 27, 2023) (Decision and Order)
DBA CONFORMANCE REQUEST; THE ADMINISTRATOR ACTED WITHIN ITS DISCRETION IN REJECTING PETITIONER'S CONFORMANCE REQUEST
In Baltimore Waterproofing, Inc. v. Administrator, Wage and Hour Div., USDOL, ARB No. 2022-0053 (ARB June 27, 2023), Petitioner Baltimore Waterproofing, Inc. sought review of the Administrator's denial of its request to add a "Waterproofer" classification to a wage determination under a Davis-Bacon Act contract. Petitioner contended the WHD should have applied the wage rate issued by Baltimore City. Petitioner further contended the WHD should not have considered union-negotiated wage rates because it is not a union organization.
The ARB affirmed the denial, finding that the Administrator acted within the broad discretion it is afforded in rejecting Petitioner's conformance request and by determining a wage rate for the Waterproofer classification that bears a reasonable relationship to the wage rates in the contract.
Schaefer v. New York Community Bancorp, Inc., ARB No. 2022-0050, ALJ Nos. 2018-SOX-00048, -00051 (ARB June 22, 2023) (Decision and Order)
PROTECTED ACTIVITY; COMPLAINANTS DID NOT HAVE GOOD FAITH SUBJECTIVE BELIEFS THAT THEIR REPORTS RELATED TO BANK FRAUD
In Schaefer v. New York Community Bancorp, Inc., ARB No. 2022-0050, ALJ Nos. 2018-SOX-00048, -00051 (ARB June 22, 2023), the ARB affirmed the ALJ's Decision and Order Denying Complaints. Respondent is a publicly traded financial institution which operates an internal Corporate Real Estate Services (CRES) unit responsible for maintaining physical properties it owns. One of its properties, 100 Duffy, was being renovated during Complainants Bermeo's and Schaefer's tenures. Inside the basement of 100 Duffy is a room that used to house telecommunications equipment (LAN room) and as part of the renovation project, Respondent requested that the telecommunications contractor remove several cabinets and racks containing cables and wires from the LAN room. The telecommunications contractor submitted a proposal to remove the equipment and cabling totaling nearly $40,000, which was approved by Respondent. The proposal required Respondent to remove any material it wanted to keep and to take down any ceiling tiles before the contractor began any work.
During the renovation, the general contractor submitted a contract change order (CO) calling for the repair of the existing ceiling grid and installation of new ceiling tiles in the LAN room totaling $40,300.05. Respondent submitted the CO to its project architect for review, who informed Respondent that the cost of the work was too high. A CRES project manager sent an email to Complainants informing them that the CO was being rejected.
Four days later, Bermeo signed the CO and had it sent to Schaefer for signature, which he rejected because of the cost and he noticed it called for repairing damage to the LAN room ceiling although no construction was authorized in the LAN room. Complainants met to discuss the matter. Afterwards, Schaefer emailed the CRES project manager, without ever having seen the LAN room, stating that there was a situation involving 100 Duffy where someone was allowing a vendor access to the LAN room to salvage copper wiring, and that there had been an exchange of cash envelopes between vendors and Respondent's employees as a result.
The same day, Complainants visited the LAN room with other employees, including Respondent's project manager. The record indicated that the entire ceiling grid had been removed or damaged and almost all the wiring was gone. Bermeo asked the project manager who caused the damage, and the manager advised that Bermeo should speak to the CRES project manager who had coordinated the work which was performed by Respondent's personnel during a three-day weekend after hours. The project manager also made a joke that if they gave him an hour, he "could have a guy here and we'll give you a million dollars."
Upon returning to Respondent's headquarters, Bermeo met with Respondent's Chief CRES Officer. During their conversation, Bermeo reported that the LAN room was damaged; that the project manager informed them that it was the CRES project manager who coordinated the work; and the project manager's "million dollars" joke. Bermeo did not mention copper wiring removal and did not raise any concerns related to project scope or bid-rigging. The Chief CRES Officer showed Bermeo an envelope of cash that he said he had received from another one of Respondent's employees and that he was waiting to speak with the CRES project manager before doing anything with the case. The Chief CRES Officer directed Bermeo to stay out of it.
The next day, Complainants visited 100 Duffy again with the telecommunications contractor who informed them that he was not responsible for any of the damage and the removal was done by Respondent's employees. During this visit, an employee of the general contractor told the Complainants that he had received an envelope of cash from one of Respondent's employees who indicated that the cash was for the sale of piping which was taken from the third floor of 100 Duffy.
A few days later, Schaefer sent an email to Respondent's Chief Operating Officer describing the LAN room's destruction and the exchange of cash envelopes between Respondent's employees. The COO later called Schaefer and told him to "do no more" and then later emailed Schaefer advising that he was not tasked with or trained as an investigator and directed him to "please stand down."
Complainants' employment was later terminated after Respondent's internal audit department determined there were deficiencies concerning the functioning of CRES, identifying the Complainants as some of the employees responsible.
Complainants filed a SOX-whistleblower complaint alleging that their reports (Bermeo's conversation with the Chief CRES Officer and Schaefer's email to the COO) constituted protected activity because they alleged an "illegal salvage operation" conducted by Respondent's employees by ensuring that fictitious scopes of work submitted by specific vendors would be approved by Respondent to ensure their ability to salvage copper wire to later distribute envelopes with cash.
In affirming the ALJ, the ARB found that substantial evidence supported the finding that the Complainants did not have good faith subjective beliefs that their reports related to conduct which constituted bank fraud—one of the laws listed in SOX's whistleblower provision—and, thus, their engagement in these communications did not constitute protected activity.
The ARB noted that Bermeo's conversation with the Chief CRES Officer only included: that the LAN room ceiling was damaged; that the CRES project manager had coordinated the work performed on the ceiling; and that the project manager told a joke about a hypothetical million-dollar payment. Bermeo's conversation only suggested that the work in the LAN room might have been mismanaged or that there might have been some wrongdoing caused by the CRES project manager, but Bermeo did not make any statements alleging any fraudulent conduct, project scoping issues, or any bid ridding to constitute bank fraud. If Bermeo had actually believed fraudulent conduct had occurred, the ARB found that it would make sense that he would have mentioned the missing copper wire, which was the foundation of Complainants' allegation of bank fraud.
The ARB noted that Schaefer's email to Respondent's COO also failed to mention that he believed one of Respondent's employees were defrauding the bank or violating any law identified in SOX's whistleblower statute. Schaefer's email only included reports that the Chief CRES Officer allegedly received a cash envelope related to Respondent's employees salvaging "abandoned copper cold water pipe" from the third floor at 100 Duffy and that the copper wire had allegedly been removed by unidentified individuals. The email did not mention a bid-rigging for copper or cash scheme, or any reference or linkage to whistleblowing, SOX, or bank fraud.
The ARB found that if Complainants subjectively believed that their reports were connected to bank fraud that their reports would have mentioned or referenced bank fraud or suggest how an alleged bid-rigging and copper salvaging scheme constituted bank fraud. Instead, their reports merely suggested questionable wrongdoing and potential mismanagement of 100 Duffy unrelated to bank fraud or any violation related to the enumerated provisions in SOX's whistleblower provision.
CONTRIBUTING FACTOR; COMPLAINANTS DID NOT HAVE OBJECTIVELY REASONABLE BELIEFS THAT THEIR REPORTS RELATED TO BANK FRAUD
In affirming the ALJ, the ARB found that substantial evidence supported the finding that the Complainants did not have objectively reasonable beliefs that their reports related to conduct which constituted bank fraud—one of the laws listed in SOX's whistleblower provision—and, thus, their engagement in these communications did not constitute protected activity.
For similar reasons in affirming the ALJ's finding that the Complainants did not have good faith, subjective beliefs that their reports constituted bank fraud, the ARB noted that the ALJ correctly differentiated between a report of bank fraud within SOX's scope and a report of theft or larceny, which is not the same as fraud. The ARB noted that the Complainants reports at most amounted to reporting an arrangement between Respondent's employees and vendors in which vendors grossly inflated their bids on contract proposals to Respondent, in turn so these bids would be accepted to eventually kick back some part of the payments of selling salvaged copper wire or other items to Respondent's employees in cash. The ARB concluded that it was not objectively reasonable for persons with Complainants' knowledge, skills, education, and experience to believe that the acts described in their reports were not merely unlawful in some general way but amounted to a specific violation of bank fraud.
Lastly, the ARB noted that Complainants also failed to present any evidence of their allegations of bid-rigging of any vendors associated with 100 Duffy or any evidence of fraud (by means of false or fraudulent pretenses, representations, or promises) resulting in a loss of property to Respondent, and thus, their allegations were not credibly established by the record.
The ARB concluded that "Complainants' reports of an alleged scheme to steal copper wire does not rise to a SOX violation because theft of physical property from a bank does not constitute bank fraud or other protected conduct under SOX and, at the time of their reports, neither Complainant reasonably believed that it did."
Barrett v. Empire Airlines, ARB No. 2023-0032, ALJ No. 2022-AIR-00010 (ARB June 22, 2023) (Decision and Order Dismissing Petition for Review)
PETITION FOR REVIEW DISMISSED; COMPLAINANT FAILED TO SUBMIT FINAL SETTLEMENT AGREEMENT FOR BOARD APPROVAL OR RESPOND TO ORDER TO SHOW CAUSE
In Barrett v. Empire Airlines, ARB No. 2023-0032, ALJ No. 2022-AIR-00010 (ARB June 22, 2023), Complainant submitted to the ARB a document titled "Petition for Review; Certificate of Service; Exhibit" (Petition), which appeared to request the ARB's approval of a purported settlement agreement between Complainant and Respondent.
AIR 21's implementing regulations provide that litigants desiring to enter into a settlement of a case being adjudicated within the Department of Labor must submit a copy of their settlement agreement to the ALJ or ARB, as appropriate, for approval. In an order issued May 17, 2023, the ARB determined that it was unable to review or approve the terms of the parties' purported settlement agreement. The ARB observed that the settlement agreement submitted by Complainant with his Petition was not fully and finally executed by the parties. The ARB also noted other irregularities in the settlement agreement which suggested that it may not be final and which were inconsistent with the posture of the case.
Consequently, the ARB denied Complainant's request for approval of the settlement agreement, without prejudice. The ARB stated that if the parties desired the ARB to review a settlement, they were required to submit a joint motion, signed by both parties or their authorized representatives, requesting such action within 14 days, along with a copy of their fully executed, dated, and final settlement agreement. Alternatively, and in the absence of a final settlement, the ARB ordered Complainant to file a brief within 14 days explaining why his appeal should not be dismissed for failure to identify in his petition for review the findings, conclusions, or orders to which exception is taken, in accordance with AIR 21 regulations. The ARB cautioned that failure to respond as ordered could result in dismissal of the appeal.
The parties did not submit a copy of a fully executed settlement agreement for ARB approval, and Complainant did not otherwise file a brief explaining why his appeal should not be dismissed. Given Complainant's failure to respond to, and comply with, the ARB's order, the ARB dismissed the appeal.
McMillan v. American Federation of Government Employees, Local Union 2145, ARB Nos. 2023-0012, -0013, ALJ No. 2021-SOC-00003 (ARB June 16, 2023) (Decision and Order Affirming ALJ's Recommended Decision and Order in Part, Vacating ALJ's Recommended Decision and Order in Part, and Remanding)
In McMillan v. American Federation of Government Employees, Local Union 2145, ARB Nos. 2023-0012, -0013, ALJ No. 2021-SOC-00003 (ARB June 16, 2023), Complainant, a member of Respondent, a local labor organization, alleged that Respondent violated the SOC regulations by raising dues without notice to members. On October 20, 2022, an ALJ issued a Recommended Decision and Order Granting Default Judgment Against Respondent, recommending that default judgment be entered against Respondent for failing to respond or participate in the proceedings. The ALJ also recommended various remedies, including that Respondent be ordered to reduce union dues and reimburse all union members for the amount improperly collected. The ARB affirmed the ALJ's recommendation to enter default judgment against Respondent, but remanded the case to the ALJ to reassess the relief ordered.
DEFAULT; THE ENTRY OF DEFAULT WAS APPROPRIATE BECAUSE, DESPITE RECEIVING NOTICE OF THE PROCEEDINGS AND BEING ORDERED TO RESPOND, RESPONDENT'S FAILED TO PARTICIPATE IN PROCEEDINGS
The ARB determined that Respondent was given proper and repeated notice of the proceedings and, despite being given several opportunities to do so, failed to participate and respond as ordered. The ARB observed that the Chief ALJ and the ALJ assigned to the case served notices of the proceedings on Respondent on three separate occasions. The notices gave Respondent notice of the initiation of the proceedings, notice of Complainant's claims against Respondent, and notice of the pre-hearing and hearing dates, among other things. The notices also ordered Respondent to file an answer to Complainant's complaint. Nevertheless, Respondent failed to file an answer, respond to Complainant's discovery requests, appear at the pre-hearing conference, or otherwise participate in the proceedings. The ALJ then gave Respondent one more opportunity to participate in the proceedings by issuing an Order to Show Cause, which directed Respondent to respond within thirty days and which warned that failure to respond could result in the entry of default judgment. Once again, Respondent failed to respond as ordered.
Respondent argued that the first and third notices issued by the Chief ALJ and the ALJ assigned to the case were not served on a proper representative of Respondent. The ARB rejected this argument. The ARB noted that: (1) Respondent failed to proffer any evidence that the individuals served with the first and third notices were not proper representatives of Respondent; (2) Respondent did not dispute that the second notice was served on a proper representative of Respondent, thereby effectively curing any service issue with respect to the other notices and proving that Respondent had proper notice of the proceedings; (3) the third notice was served on an individual who had entered, and never withdrawn, her appearance on behalf of the Respondent; and (4) the individual who Respondent asserted should have been served admitted to having knowledge of the proceedings, despite the alleged service defect, but failed to take steps to participate in the proceedings.
Respondent also argued that the Chief ALJ and the ALJ assigned to the case erred by serving Respondent via email. The ARB found no error in the use of email service. Although the OALJ Rules of Practice and Procedure generally require written consent for email service, the ARB noted that, before these proceedings began, the Chief ALJ issued an Administrative Notice announcing that ALJs would effectuate service via email, in lieu of certified mail and other forms of service, because of the ongoing COVID-19 pandemic. The ARB concluded that use of email service in the circumstances was appropriate and consistent with the OALJ Rules of Practice and Procedure, which permit the waiver, modification, or suspension of any Rule "when doing so will not prejudice a party and will serve the ends of justice." The ARB stated that "[u]ndoubtedly, switching to email service in these circumstances ‘served the ends of justice,' and [Respondent] has not established any unfair prejudice it suffered as a result of being served via email."
Finally, Respondent argued that it did not receive a copy of the ALJ's Order to Show Cause when it first issued. The ARB rejected this argument as well. The ARB determined that the record established that the Order to Show Cause was emailed to Respondent's President on the day it was issued, and that additional courtesy copies of the Order to Show Cause were given to Respondent's President on two subsequent occasions before the deadline to respond expired, including once in person by the Chief ALJ. Although Respondent's President denied receiving the Order to Show Cause on the day it was issued, she did not dispute that she received the subsequent courtesy copies. Additionally, the record reflected that a representative of the Respondent's national union advised Respondent's President to respond to the Order to Show Cause, and warned her of the serious consequences that could result from default judgment if Respondent did not respond. Even so, Respondent still failed to respond by the deadline.
DEFAULT JUDGMENT; DEFAULT JUDGMENT WAS APPROPRIATE BECAUSE COMPLAINANT'S ALLEGATIONS OF FACT, ACCEPTED AS TRUE, ESTABLISHED A VIOLTION OF THE SOC REGULATIONS
Having determined that default should be entered against Respondent, the ARB next determined whether the allegations of fact proffered by Complainant, which it must accept as true because of Respondent's default, warranted judgment in her favor. In her complaint, Complainant alleged that money was taken out of members' paychecks without notice. According to Complainant, this violated 29 C.F.R. § 458.2, which states that a local labor organization like Respondent may only increase member dues: "(A) by majority vote by secret ballot of the members in good standing voting at a general or special membership meeting, after reasonable notice of the intention to vote upon such question, or (B) by majority vote of the members in good standing voting in a membership referendum conducted by secret ballot." The ARB concluded that Complainant's allegations of fact, accepted as true, established a violation of this provision: "Without notice to members, [Respondent] could not have properly raised dues."
REMEDIES; ARB COULD NOT ASSESS APPROPRIATE REMEDIES BECAUSE OF UNDEVELOPED RECORD
The ALJ recommended various remedies for Respondent's violation of the SOC regulations, including that Respondent "[r]educe union dues to the amount previously set before improperly raising the dues" and "[r]eimburse all union members the difference between the amount of dues prior to the improper increase and the increased amount of union dues." The ALJ did not identify a specific monetary reimbursement amount, specify the appropriate rate to which the dues should be reduced, or otherwise provide a fixed formula or method for calculating, setting, or defining such amounts.
The ARB concluded that the remedies recommended by the ALJ were "too imprecise and open-ended to reasonably apprise the parties, and any reviewing or enforcing entity, of [Respondent's] obligations, and would likely lead to additional disputes and adjudication between the parties." Additionally, the ARB concluded that the record did not allow the ARB to fashion a more precise remedy. "Given the manner in which this case proceeded and resolved, it is not clear what precise remedies [Complainant] requested or sought from [Respondent]. Additionally, given the posture of the proceedings, the ALJ did not develop the record with respect to the dues rates before, during, and after the increase alleged by [Complainant]; what other factors may have affected the rates during the relevant period, including in the interim between when [Complainant] first complained of the dues increase and the present; when, how much, and how often dues were collected during the relevant period; what, if any, amounts have already been repaid to [Complainant] or other Union members; and other pieces of information that would be necessary to more precisely define the monetary remedy, if any, in this case." Accordingly, the ARB remanded to the ALJ "to conduct such additional proceedings as he deems necessary and prudent to develop the record and more precisely define the remedies that the ALJ believes are appropriate."
Kossen v. Empire Airlines, ARB No. 2022-0004, ALJ No. 2019-AIR-00022 (ARB June 13, 2023) (Decision and Order)
CONTRIBUTING FACTOR; SAME ACTION DEFENSE; REOPENING OF THE RECORD; ALJ BIAS; REJECTION OF WITNESSES
In Kossen v. Empire Airlines, ARB No. 2022-0004, ALJ No. 2019-AIR-00022 (ARB June 13, 2023), the ARB affirmed the ALJ's order dismissing a complaint arising under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21). Respondent hired Complainant to work as a pilot. After he completed company training, Complainant's performance left Respondent's managers concerned about his ability to pilot an aircraft. On February 26, 2019 Complainant and another pilot were operating an aircraft when they received warnings from the aircraft's instruments. One of the warnings was a "stick shaker," warning of an impending aerodynamic stall. The other was a "stick pusher," which occurs when the aircraft automatically drops its nose, independent of pilot control, to prevent a stall.
Complainant's supervisor and one of Respondent's managers interviewed Complainant about the warnings on March 1 and 5, 2019. They concluded that Complainant minimized the seriousness of the warnings and refused to take responsibility for his actions as the Pilot-in-Command. Respondent terminated Complainant's employment on March 7, 2019 for "substandard performance."
CONTRIBUTING FACTOR; PROTECTED ACTIVITY DID NOT CONTRIBUTE TO DISCHARGE
Complainant submitted an Aviation Safety Action Program (ASAP) report about the February 26 incident, and he opined that the aircraft involved in the February 26, 2019 incident should have been grounded. The ARB concluded that these constituted activities protected by AIR 21, But the ARB agreed with the ALJ's conclusion that Complainant's protected activities did not contribute to his discharge.
The record indicated that Respondent had serious concerns about allowing Complainant to continue working as a pilot after its investigation into the February 26 incident. Respondent's concerns extended beyond evaluating Complainant's competency and ability as a pilot in command to include his attitude and acceptance of responsibility. The ARB also agreed with the ALJ's conclusion that, if Respondent's references to Complainant's employment history violated the Pilot Records Improvement Act of 1996, it would not alter any findings or conclusions regarding Complainant's AIR 21 retaliation claim.
SAME ACTION DEFENSE; COMPLAINANT WOULD HAVE BEEN FIRED IN THE ABSENCE OF PROTECTED ACTIVITY
The ARB concluded that Respondent would have discharged Complainant in the absence of any protected activity. Respondent's managers were concerned that Complainant "did not understand, or was not willing to assume, the responsibility of a pilot-in-command." The ARB concluded that, even if Complainant had not filed an ASAP report or made any other protected complaints prior to his discharge, Respondent would still have engaged in the March 1 and 5, 2019 conversations that led to his discharge.
REOPENING THE RECORD; REOPENING THE RECORD WOULD NOT HAVE RESULTED IN REVERSAL OF DIMISSAL OF THE COMPLANT
Complainant submitted five motions asking the ARB to reopen the record to admit additional exhibits. The ARB noted that a record may be reopened based upon newly discovered evidence which, by due diligence, could not have been discovered in time to move for a new trial. The Board denied each of the motions, finding that they were attempts by Complainant to submit materials that were unrelated to his performance and attitude following the February 26 incident.
ALJ BIAS; ALJ DID NOT EVINCE BIAS
Complainant asserted that the ALJ was biased against him because the ALJ did not rule in his favor in a prior case and because the ALJ's son was employed by an airline. The ARB concluded that Complainant presented no evidence that the ALJ engaged in improper behavior. The ARB also observed that the ALJ went out of his way to ensure that Complainant was allowed to present his case despite an ongoing failure to comply with the ALJ's written orders and verbal directions.
REJECTION OF WITNESSES; ALJ DID NOT ERR IN DENYING WITNESS TESTIMONY
Complainant argued that the ALJ abused his discretion by not allowing Complainant's expert, an experienced pilot and adjunct professor, to testify. The ARB agreed with the ALJ's conclusion that the expert's opinions were irrelevant to Complainant's complaint. The ARB also agreed that Complainant failed to follow the ALJ's instructions to provide basic information about other individuals Complainant sought to present as witnesses.
Martin v. Paragon Foods, ARB No. 2022-0058, ALJ No. 2021-FDA-00001 (ARB June 8, 2023) (Decision and Order)
TIMELINESS OF OSHA COMPLAINT; EQUITABLE MODIFICATION; EQUITABLE ESTOPPEL; EQUITABLE TOLLING; NEW ARGUMENTS ON APPEAL
In Martin v. Paragon Foods, ARB No. 2022-0058, ALJ No. 2021-FDA-00001 (ARB June 8, 2023), the ARB affirmed the ALJ's dismissal of an untimely complaint filed under the employee protection provisions of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), Solid Waste Disposal Act (SWDA), and Food Safety Modernization Act (FSMA). Respondent hired Complainant as a custodian on December 1, 2015. During his employment Complainant filed complaints with several state and federal agencies alleging that Respondent engaged in criminal behavior and committed safety violations. Respondent terminated Complainant's employment on January 20, 2020.
In April and May of 2020, Complainant contacted OSHA to complain about safety and health issues on Respondent's premises, but he did not express an intent to file whistleblower retaliation claim. On September 1, 2020, Complainant filed a whistleblower retaliation complaint with OSHA, alleging that Respondent discharged him on January 20, 2020, in retaliation for raising safety complaints. On October 9, 2020, OSHA dismissed the complaint as untimely because Complainant filed his complaint more than 180 days after Respondent terminated his employment.
TIMELINESS OF OSHA COMPLAINT; FILING PERIODS FOR COMPLAINTS ARISING UNDER CERCLA, SWDA, AND FMSA
The ARB noted that complainants pursuing whistleblower retaliation claims under CERCLA, SWDA, and FSMA must meet certain deadlines whether they are represented by counsel or proceeding pro se. Employees alleging retaliation in violation of CERCLA and SWDA must file their complaints with OSHA within 30 days of the alleged retaliatory act, and under the FSMA, an employee must file a complaint with OSHA within 180 days after the alleged retaliatory act. Therefore, to be timely under CERCLA and SWDA, Complainant was required to file his retaliation complaint with OSHA by February 19, 2020, and on or before July 18, 2020 to be timely under the FSMA. Complainant filed his retaliation complaint on September 1, 2020, 225 days after Respondent discharged him, and his complaint was therefore untimely.
EQUITABLE MODIFICATION; FILING PERIODS UNDER CERCLA, SWDA AND FMSA ARE SUBJECT TO EQUITABLE MODIFICATION
The ARB explained that, under statutes where the filing period is not jurisdictional, the filing period is subject to waiver, equitable estoppel, and equitable tolling. Noting that the statutory provisions that govern this case did not refer in any way to OSHA's jurisdiction, the filing periods were not jurisdictional and therefore were subject to equitable modification.
The ARB explained that equitable tolling and equitable estoppel are two different and distinct equitable doctrines. Equitable tolling focuses on the excusable ignorance of the respondent's discriminatory act. Equitable estoppel, in contrast, examines the complainant's conduct and the extent to which the complainant has been induced to refrain from exercising his rights.
The ARB noted that the ALJ provided Complainant, appearing pro se, "with a degree of adjudicative latitude" throughout the proceedings but, as the complaining party, it was Complainant's burden to demonstrate why equitable principles should be applied to toll the limitations period.
EQUITABLE ESTOPPEL; COMPLAINANT NOT ENTITLED TO EQUITABLE ESTOPPEL WHEN RESPONDENT ALLEGEDLY LIED ABOUT REASON FOR DISCHARGE
Equitable estoppel "presupposes that the plaintiff has discovered, or as required by the discovery rule, should have discovered, that the defendant injured him, and denotes efforts by the defendant—beyond the wrongdoing upon which the claim is grounded—to prevent the plaintiff from filing a timely complaint." Application of the doctrine of equitable estoppel subtracts from the limitations period the entire period during which the modifying condition is operating to prevent a respondent from benefitting as the result of its concealment.
In this case, Complainant argued that his late filing should be excused because Respondent lied to him about its reason for terminating his employment. But "a showing of deception as to motive supports equitable estoppel only if it conceals the very fact of discrimination; equitable estoppel is not warranted where an employee is aware of all of the facts constituting discriminatory treatment but lacks direct knowledge of the employer's subjective discriminatory purpose." The ARB held that the limitations period began to run once Complainant received notice of the adverse employment action, i.e., upon his discharge on January 20, 2020, not when he realized that the reason given by the employer for the adverse action might not be the real reason.
EQUITABLE TOLLING; COMPLAINANT NOT ENTITLED TO EQUITABLE TOLLING
Equitable tolling is a rare and "extraordinary measure that applies only when plaintiff is prevented from filing despite exercising that level of diligence which could reasonably be expected in the circumstances." In determining whether the Board should toll a statute of limitations, the ARB has recognized several principal situations in which a moving party may be entitled to the remedy, including: (1) when the movant has raised the precise statutory claim in issue but has done so in the wrong forum; (2) when the movant has in some extraordinary way been prevented from filing; and (3) when the movant has some excusable ignorance of the respondent's discriminatory act.
In this case, Complainant asserted that his lateness should be excused due to a number of extenuating circumstances, all of which the ARB rejected. Complainant argued that: (1) he could not timely file his retaliation complaint because he was grieving his grandmother's death and needed to attend to her funeral and estate (ARB held that he did not provide information indicating that he suffered a level of incapacity that rendered him unable to attend to his affairs); (2) he filed his whistleblower complaint in the wrong forum (ARB held that the majority of his complaints were in 2019, before Respondent terminated his employment, and his April and May 2020 OSHA complaints were not about retaliation); (3) he reviewed OSHA materials and concluded that weekends and holidays were not counted as days affecting the filing period (ARB held that this mistake was insufficient to warrant tolling of the filing period); and (4) he was "faced with cancerphobia and medical depression, which made it difficult to file a whistleblower claim" (ARB held he failed to present any evidence that these illnesses made it impossible for him to manage his day-to-day activities.
NEW ARGUMENTS ON APPEAL; ARB DOES NOT CONSIDER NEW EVIDENCE OR ARGUMENTS ON APPEAL
On appeal to the ARB, Complainant argued for the first time that: (1) Respondent retaliated against him in August 2019 by issuing him a "summary write up;" (2) he reported the summary write up as retaliation to OSHA in August 2019 (as opposed to reporting safety and health concerns); and (3) Respondent blocked him from filing a retaliation claim with OSHA by refusing to provide him a record of the summary write up. Complainant did not cite to any evidence in the record supporting these assertions, and they were not discussed by the ALJ.
The Board indicated that, like the federal courts, it does not generally consider arguments raised for the first time on appeal, nor evidence submitted for the first time on appeal. The ARB also found that Complainant's new arguments were "rife with factual inconsistencies." Accordingly, it rejected Complainant's new assertions on appeal that he reported to OSHA in August 2019 that Respondent issued a retaliatory summary write up.